Reference no: EM132869866

Questions -

Q1) On 1/1/19, Investor purchased 3,000 of the outstanding 10,000 shares of Investee for $2,000. For 2019, Investee declared total dividends to all shareholders of $300 and reported Net Income of $1,250. What effect will this investment have on Investor's 2019 Net Income? What is the balance in the Equity Method Investment on Investor's 2019 Bal. Sheet?

Q2) Bob had net income of $200,000 and declared preferred dividends of $25,000 during the current year. He began the year with 25,000 common shares outstanding. He issued 30,000 shares on June 30 and repurchased 6,000 of the newly issued shares on November 1. Compute the weighted-average common shares outstanding for the year. Compute Bob's basic EPS for the year.

Q3) Jill had net income of $45,000 for the year. She declared $3,000 in preferred dividends on December 23. She began the year with 10,000 common shares outstanding. On July 1, she declared a 10% common stock dividend. Compute the weighted-average common shares outstanding for the year. Compute Jill's basic EPS for the year.

Q4) Tim had net income of $6,000 for both last year and the current year. The shares outstanding for the prior year was 1,000 shares for the whole year. On December 1 of the current year, he declared a two-for-one stock split. There were no other stock transactions in either year. Compute the EPS that would be shown on a comparative income statement for Years 1 and 2 (In other words, what are EPS for Years 1 and 2 on a split-adjusted basis?)

Q5) Beta began operations on the first day of the year. On that day they issued 15,000 shares. On March 1 they issued 20,000 shares and on July 1, another 30,000 shares. On December 1, they repurchased 5,000 shares of outstanding shares. Compute the weighted-average shares of stock for the first year of operation. Compute Beta's basic EPS for the first year of operation if net income was $60,000.

Q6) Beta reported $20,000 in interest expense for the current year for bonds that were issued in prior years. Its tax rate is 40%. By what amount is the numerator of diluted EPS positively adjusted?

Q7) Gamma reported $105,000 in net income and its weighted average shares outstanding for the year is 20,000 shares. In prior years it sold $200,000 of 8% long-term bonds at par which are still outstanding. The bonds are convertible into 5,000 shares of common stock. The tax rate for all years is 40%. If Gamma has no other potentially dilutive securities and no preferred stock, what are basic and diluted EPS?

Q8) Beta reported $60,000 in net income for the current year. The company had $50,000 of 10% non-convertible preferred stock outstanding all year and $500,000 of 6% convertible bonds outstanding all year. Assuming the convertible bonds are dilutive, determine the numerator of both basic and diluted EPS when the tax rate is 40%.

Q9) Gamma reported $65,000 net income for the year with 10,000 common shares outstanding all year. It also had 5,000 shares of $100 par, 8% convertible preferred shares outstanding all year.  Each preferred share is convertible into 5 shares of common stock. Determine basic and diluted EPS.

Q10) Alpha reported net income of $50,000 for the year. It has 30,000 shares of common stock outstanding all year. Two years ago the company granted 20,000 stock options that allow employees to purchase shares for $15 each. The company stock has averaged $20 in the market during the year. Compute basic and diluted EPS.